IP: A historical perspective on the America Invents Act

Widely hailed as the most sweeping change to American patent law since 1956, the Leahy-Smith America Invents Act (AIA) became law on Sept. 16, 2011, but most of its provisions don’t take effect until March 16, 2013.

The Copyright Clause of the U.S. Constitution authorizes Congress to promote the advancement of science by securing for inventors the exclusive rights to their discoveries, for a limited time. The nation's first patent issued on July 31, 1790, for an improved process of making potash. Two other patents were issued that year, one to a man named Evans who was a serial inventor. Thomas Jefferson implemented the Patent Act of 1793 in his capacity as Secretary of State. Evans later accused Jefferson of patent infringement. Jefferson groused about Evans's entitlement to the claim, but then settled. It seems that ambiguities in patent claim language cut two ways even back then.

Patents have since issued at a steady and ever-increasing pace, as measured by these milestones:

Patent Number

Date of Issue

1,000,000

Aug. 8, 1911

2,000,000

April 30, 1935

3,000,000

Sept. 12, 1961

4,000,000

Dec. 12, 1976

5,000,000

March 19, 1991

6,000,000

Dec. 7, 1999

7,000,000

Feb. 14, 2006

8,000,000

Aug. 16, 2011

The U.S. took 121 years to issue its first million patents, but only about five years to issue the last million. One explanation is society's increasing technological prowess. Another explanation is that exclusive patent rights look pretty good in an era where we face stiff foreign competition.

Patents are supposed to encourage innovation by permitting innovators the time to recoup their investment. It is difficult to imagine that a drug company would spend hundreds of millions of dollars to get FDA approval for a new drug if not for the exclusivity of practicing the invention. Moreover, the quid-pro-quo for obtaining a patent is to teach the public how to make the invention. Otherwise this free flow of information would too often be relegated to the domain of trade secrets.

But patents do not always end up encouraging innovation. Many experts believe that the Wright brothers procured a patent position on their airplane then used the grant to stifle competition. This meant that the U. S. lagged far behind Europe in aviation technology at the outbreak of World War I. There is much concern over the quality of existing patents, many of which are invalidated only after expensive litigation. The quality problem is exacerbated when examination suffers because the Patent Office does not have budgetary authority to set its own rates, and Congress may divert fees collected by the Patent Office. The U. S.s patent system operates under a different philosophy than does that of other countries, so there is a movement to harmonize.

The AIA addresses these problems by reform. While maintaining a one year grace period for inventors who publish their inventions before filing a patent application, the AIA harmonizes with other countries’ policies by adopting a 'first to file' philosophy—departing from the uniquely American 'first to invent' philosophy of the past. Post-grant review processes are changed making it easier to invalidate an issued patent. It will be possible for third parties to submit materials for consideration by a patent examiner for a limited time before the patent issues. The Patent Office now has authority to set its own fees in recouping its aggregate expenses.

Other changes of interest to patent attorneys include the streamlining of certain cumbersome procedures. False marking claims are curtailed where the public can no longer bring qui tam actions. There is a prior user defense that permits the continuing use of trade secrets which become patented by another.

Critics of the reform argue that the U.S. may lose its competitive edge in innovation. Some say that venture funding will be less easy to obtain when the ability to invalidate patents is enhanced. Disclosure of technical information will in some cases be delayed until the patent attorney can deliver work product. Others argue that the new law favors large companies at the expense of small startups. This is because startups need time for prototyping and testing that also needs funding, and comes only after disclosure of the invention to investors. Critics blame a few key lobbyists representing large companies for much of what they see as wrong with the reform. There is concern that financial independence without Congressional oversight may lead to an agency run amuck.

It is probably worthwhile to visit with patent counsel and review internal procedures that may need revision in view of these sweeping changes.